San Francisco -- American Stores Co. President David Maher urged retailers attending this year's National Association of Chain Drug Stores Marketplace Conference to seek future profits by enhancing the front-end of their health and beauty care operation.
Maher, who serves as this year's NACDS chairman of the board, addressed a record conference attendance of 550 retailers and 3,300 suppliers during the ninth-annual meeting, held at the Moscone Convention Center here June 24 to 28.
He told the gathering to expect further declines in third party prescription margins and reductions in pharmacy dispensing fees reimbursed by Medicaid.
The expiration earlier this year of the moratorium on the 1990 Omnibus Budget Reconciliation Act will affect Medicaid reimbursement policies, Maher explained.
"We continue to see further reduction in prescription drug margins with reductions occurring in dispensing fees already happening in several of our states," said the chain executive.
Last month Maher was appointed president and chief operating officer of American Stores, the nation's third largest food and drug chain, based in Salt Lake City.
Maher pointed to opportunities in merchandising products at the front-end by citing a statistic that seven out of 10 buying decisions are made after the consumer has entered the store.
According to Maher, that statistic indicates the art of merchandising is not dead. "It says that a good merchant can succeed and thrive. And most of all, it says there is a tremendous opportunity for everyone in this room to sell more product and to make more profit." Maher added.
He advised retailers to change how they think about merchandising products in their stores, and to form alliances with their suppliers in order to achieve merchandising programs that produce results.
"The merchandising of the socalled front-end of the drug store is probably among one of the most critical issues facing our industry today," he stated.
"If indeed 70% of the persons in our stores today are entirely discretionary, it behooves each of us to work together to create the best merchandising programs, and to put more sizzle into selling in our stores."
